By Lefteris Papadimas and John O'Donnell
ATHENS/FRANKFURT, July 6 (Reuters) - Greece's outspoken finance minister resigned on Monday, removing one major obstacle to any deal to keep Athens in the euro zone after Greeks voted resoundingly to back the government in rejecting the austerity terms of a bailout.
Leftist Prime Minister Alexis Tsipras promised German Chancellor Angela Merkel that Greece would bring a proposal for a cash-for-reforms deal to an emergency summit of euro zone leaders on Tuesday, a Greek official said. It was unclear how much it would differ from other proposals rejected in the past.
Gloomy officials in Brussels and Berlin said a Greek exit from the currency area now looked ever more likely.
But they also said talks to avert it would be easier without Yanis Varoufakis, an avowed "erratic Marxist" economist who infuriated his fellow euro zone finance ministers with an informal style and hectoring lectures. He had campaigned for Sunday's 'No' vote, accusing Greece' creditors of "terrorism."
"I was made aware of a certain 'preference' by some Eurogroup participants, and assorted 'partners', for my... 'absence' from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement," Varoufakis said in a statement.
His sacrifice suggested Tsipras is determined to try to reach a last-ditch compromise with European leaders.
Greece's political leaders, more accustomed to screaming abuse at each other in parliament, spent the day locked in talks at the president's office trying to produce an unprecedented national unity statement.
Greece's chief negotiator in aid talks with international creditors, Euclid Tsakalotos, a soft-spoken academic economist, was the frontrunner to become finance minister, Varoufakis said.
Austrian Finance Minister Hans Joerg Schelling said publicly what other euro zone figures had said in private: "Varoufakis was someone who massively destroyed trust through his name-calling and by repeatedly criticizing the institutions ... that's why I hope that the basis for talks will now be better."
To win any new deal, Greece will have to overcome the distrust of partners, above all Germany, Greece's biggest creditor and the EU's biggest economy, where public opinion has hardened in favor of cutting Greece loose from the euro.
Varoufakis had a particularly acrimonious relationship with Germany's Finance Minister Wolfgang Schaeuble. A German government spokesman, asked about the departure of Varoufakis, told reporters policies mattered more than people.
A woman withdraws money from an ATM machine next to a beggar and a graffiti reading' No to fear' in Thessaloniki on July 6, 2015. (SAKIS MITROLIDIS/AFP/Getty Images)
DEFIANCE
While jubilant Greeks celebrated their national gesture of defiance late into the night, there was gloom in Brussels.
European Commission Vice-President Valdis Dombrovskis told a news conference there was no easy way out of the crisis and the referendum result had widened the gap between Greece and other euro zone countries.
Tsipras has also spoken by telephone to French President Francois Hollande, who is trying to broker an agreement ahead of Tuesday's Brussels summit. Hollande was due to meet later on Monday with Merkel in Paris to seek a joint response from the euro zone's two leading powers.
But an EU source said barring some major Greek concession, euro zone leaders were more likely to discuss a Greek exit, and how to reinforce the remaining currency union, than any new aid program for Athens on Tuesday.
While France and Italy have emphasized the importance of more talks, German public opinion is running out of patience.
Merkel's vice-chancellor, Social Democrat Sigmar Gabriel, told a news conference: "If Greece wants to stay in the euro, the Greek government must quickly make a substantive offer that goes beyond its willingness thus far."
On Sunday he said Tsipras had torn down the last bridge for a compromise.
A German Finance Ministry spokesman brushed aside Greek demands for a big debt write-down, which the International Monetary Fund said last week may be necessary. He said the IMF was promoting its traditional stance but Europe had opted for solutions other than debt cuts to put countries back on track.
Bankers said the Greek government would issue a new decree on Monday extending for at least a few more days an eight-day-old bank closure that has crippled the economy. There were long lines at cash machines, where Greeks are rationed to withdrawing 60 euros a day, and 20-euro banknotes have started to run out.
Greece's immediate fate is in the hands of the European Central Bank, which has kept Greek banks open with a trickle of emergency cash. The ECB's policymaking governing council delayed until late afternoon a conference call to decide how long to go on keeping Greek banks afloat.
Several people familiar with ECB policy said it would probably reject a Greek request to raise a cap on emergency liquidity assistance and leave the limit unchanged, slowly tightening the noose but giving banks a few more days' air.
People celebrate in front of the Greek parliament as the people of Greece reject the debt bailout by creditors on July 6, 2015 in Athens, Greece. (Christopher Furlong/Getty Images)
"BRAVE CHOICE"
After five years of economic crisis and mass unemployment, Greek electors voted 61.3 percent 'No' to the bailout conditions already rejected by their radical leftist government, casting Greece into the unknown.
"You made a very brave choice," Tsipras said in a televised address as jubilant supporters thronged Athens' central Syntagma Square to celebrate the act of defiance of Europe's political and financial establishment.
"The mandate you gave me is not the mandate of a rupture with Europe, but a mandate to strengthen our negotiating position to seek a viable solution."
The euro tumbled against the dollar on Asian markets after the setback for Europe's monetary union, and European shares and bonds took a hit when markets opened after the weekend. But the losses were contained and there was no sign of serious contagion to other weaker euro zone sovereigns.
Analysts with several international banks including Citi, Barclays, BNP Paribas and J.P. Morgan said a "Grexit" from the euro zone was now their most likely scenario.
EU officials said it would be hard to give Greece easier terms, not least because its economy has plunged back into recession since Tsipras' Syriza party won power in January. Public finances were now in a far worse position than when the rejected bailout deal was put together.
But on the streets of Athens, citizens were unrepentant at their defiant vote.
"I voted 'No' to austerity; I want this torture to end," said 42-year-old Katerina Sarri, a mother of two manning a Kiosk in Athens.
"I'm aware that we will suffer for years but I'm still hopeful. I need to know that there is light at the end of tunnel, that the lives of my children will be better," she said. (Additional reporting by Renee Maltezou, Deepa Babington, Lefteris Karagiorgiannis and Angeliki Koutantou in Athens, Paul Carrel and Andreas Rinke in Berlin, Julien Ponthus in Paris; Writing by Paul Taylor; Editing by Peter Graff)
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Oldest Newest Share + Today 8:06 PM EDTU.S. At Odds With Germany Over Greek Debt CrisisDaniel Marans reports:
On Monday, the Obama administration renewed its calls for a resolution to Greece’s debt crisis, but in a notable change from recent months, focused its remarks on Greece’s creditors.
"The task before the leaders of Europe remains the same," White House press secretary Josh Earnest said at a press briefing. "We have long indicated that it's our view that it's in their collective interest for these differences to be resolved."
Read more here.
Share this:TweetSharetumblr Share + Today 4:37 PM EDTLooking Ahead At Tomorrow's Emergency MeetingShare this:TweetSharetumblr Share + Today 4:29 PM EDTGreek Parliament President Slams Martin Schulz
Greek Parliament President Zoe Konstantopoulou did not take kindly to the combative statements of European Parliament head Martin Schulz in the wake of Greek voters' decision to reject a bailout deal with European creditors.
Greek media site Esfyn reports that Konstantopoulou will send Schulz a letter imploring him "not to make any more statements which show disregard to people's mandate resulting from a democratic procedure of popular sovereignty, such as yesterday's referendum.
Schulz said on Monday that Greece faces a "difficult and dramatic time" if its government does not come up with a new meaningful proposal.
Share this:TweetSharetumblr Share + Today 4:19 PM EDTBernie Sanders Backs GreeksJacob Kerr writes:
Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) voiced his support for Greece’s decision to reject a bailout deal that would have come with more austerity measures for the country.
“I applaud the people of Greece for saying ‘no’ to more austerity for the poor, the children, the sick and the elderly,” Sanders said in a statement on Monday. “In a world of massive wealth and income inequality Europe must support Greece's efforts to build an economy which creates more jobs and income, not more unemployment and suffering.”
Read more here.
Share this:TweetSharetumblr Share + Today 4:05 PM EDTLagarde Warns TsiprasReuters reports:
Share this:TweetSharetumblr Share + Today 3:53 PM EDTVaroufakis' Going Away PartyThe International Monetary Fund told Greece on Monday it could not provide funds to countries that had missed payments due to the international lender, an IMF representative said.
IMF Managing Director Christine Lagarde spoke to Greek Prime Minister Alexis Tsipras about the Greek people's rejection in a referendum of the bailout terms of international lenders.
"The managing director explained the fund's inability to disburse under its arrears policy," the representative said in a statement that appeared to refer to Greece's default on an IMF loan last month.
SkyNews' Ed Conway spoke with Greece's former finance minister on Monday night. Varoufakis says he may be leaving the finance minister, but will be ready on the sidelines to offer advice.
In which I gatecrash @yanisvaroufakis's leaving party at the finance ministry in Athens: https://t.co/q24TfFcvei
— Ed Conway (@EdConwaySky) July 6, 2015
Daniel Marans reports:
The creditors of nations long enforced their claims by the cannons of government and, in some cases, the cannons of companies. They called it gunboat diplomacy, and it cared little for the fate of those at the wrong end of the guns.
While the modern financial services era largely silenced the cannons, the political institutions that replaced them still press creditors' claims ahead of all other obligations a nation might have.
On Sunday, Greek voters stood up and said no to this arrangement. If Greece gets its way, the future of its people's pensions, infrastructure, health care and education will count at least as much as the payment of its debt.
Greece has long said it, and since Sunday's referendum, some other European leaders are saying it: Greece needs debt relief.
Read the full story here.
Share this:TweetSharetumblr Share + Today 2:35 PM EDT'Sending A Message'Reuters' George Hay analyzes the ECB's move:
ECB lifting of ELA collateral haircuts is about sending a message to Greece post-referendum, as much as driven by technical factors
— George Hay (@gfhay) July 6, 2015
ECB haircut move restricts crisis loans and reduces the amount of time Greek banks can stay alive. They are already almost illiquid.
— George Hay (@gfhay) July 6, 2015
ECB looks to have calculated that the fallout from potentially putting a weak Greek bank in resolution = less than no response to a No vote.
— George Hay (@gfhay) July 6, 2015
French President Francois Hollande and German Chancellor Angela Merkel met in Paris on Monday to discuss the Greek vote.
The Associated Press reports:
Share this:TweetSharetumblr Share + Today 2:13 PM EDTMore On The ECB AnnouncementThe leaders of Germany and France say they respect Greece's vote against the terms of an international bailout, and added the door remains open to negotiations with the Greek government to find a way to keep the country in the 19-country eurozone.
German Chancellor Angela Merkel stressed the importance of Greece taking "responsibility" for reforming its economy, while French President Francois Hollande said it is important for Europe to show "solidarity" with Greece. The two leaders run the eurozone's largest economies.
The two leaders met in Paris on Monday. Their brief statement sets the tone for an emergency summit Tuesday in Brussels of the eurozone's 19 national leaders.
Both stressed the urgency of coming to a decision on a solution to Greece's financial woes, with Merkel demanding proposals from Greece's prime minister this week.
From the Associated Press:
Share this:TweetSharetumblr Share + Today 2:02 PM EDTECB Keeps Emergency Credit UnchangedThe European Central Bank says it is keeping the level of emergency credit to Greek banks unchanged, leaving the banks under increasing pressure as they try to cope with cash withdrawals.
The ECB says in a statement that the credit "can only be provided against sufficient collateral." That collateral has been weakened due to the worsening financial situation of Greece.
The decision leaves the Greek banks in a stranglehold, as they struggle to replenish cash machines in the coming days.
The ECB says it is monitoring the situation in the financial markets closely and is ready to use all available measures to keep stability in the 19-nation eurozone.
Share this:TweetSharetumblr Share + Today 1:51 PM EDTChange In Style, Not In SubstanceEuropean Central Bank leaves level of emergency credit to Greek banks unchanged - @AP http://t.co/LRnP7D96bm
— Breaking News (@BreakingNews) July 6, 2015
Greece may have a new finance minister, but the government will likely hold the same views opposing austerity. Five years ago, Euclid Tsakalotos wrote a paper on the Greek economic crisis, in which he criticized the austerity measures imposed on Greece through a bailout. Such policies “will lead not only to severe social hardship but is also unlikely to confront the underlying problems,” he said. His tone appears very much in line with that of his predecessor, Yanis Varoufakis.
Uh Oh Troika. New Greek Finance Minister is just as smart as old one! (got my hands on one of his papers). What now? pic.twitter.com/V0X2dWatgy
— Mariana Mazzucato (@MazzucatoM) July 6, 2015
Gianni Del Vecchio, Editor-in-Chief of HuffPost Italy, argues that the future of Greece, and by consequence that of Europe, lies in the hands of Angela Merkel and Francois Hollande.
"It's not in the hands of Alexis Tsipras, even though he emerges reinforced by the "No" vote cast by six out of every 10 Greeks," Del Vecchio says. "It's not in the hands of the German hawks and Eastern Europe, though they were circling above Syntagma Square immediately after the referendum. Nor is it in the hands of our Italian Premier Renzi, who during the night shared with news agencies a certain sense of irritation over the reemergence of the French-German axis. Only the Monday evening meal between Angela and Francois in Paris will delineate an approach that will then be discussed -- or better yet, "ratified" -- Tuesday afternoon during the Euro summit held with all the other countries in the Eurozone."
Read more here.
Share this:TweetSharetumblr Share + Today 1:26 PM EDT'Not Without Greece'HuffPost Spain's Editorial Director, Montserrat Dominguez, weighs in on Sunday's vote:
Greece's 'No' was so definitive, so emotional, that it mortally threatens the necessary trust to move forward in the negotiations. The dialectical knives of this nerve-racking week -- then-Finance Minister Varoufakis accusing the EU of terrorism, etc -- were effective in mobilizing the Greek people, but its boomerang effect has been the implosion of any way to bridge a new dialogue.
The Greeks are proud, and they just demonstrated it at the polls. But what about the wounded pride of Berlin and Brussels, of the creditors who feel insulted while at the same time are also being asked for new credit extensions?
Read her full analysis here.
Share this:TweetSharetumblr Share + Today 1:20 PM EDTLeaders Of Europe's New Left RejoiceHuffPost Italy reports:
We are in Athens, but the headquarters are Spartan. The air conditioning isn’t working, but nobody in these rooms with their partially white and partially (of course) red walls is concerned with it. Fresh beverages, peanuts, exquisite Greek almonds and other snacks arrive. You munch and take what refreshment you can, with eyes attached to the television.
Besides the polls, the first partial data from the islands is coming in: "No." There is a cry of victory in every language; it is because in some areas the “no” vote has reached 80 percent. “Incredible,” says one Frenchman. We are in Athens and from here, as it seems from what is on the television, Sparta is wavering. It had been expected to vote "yes," but now that prediction is withdrawn: It is a “no” there as well. “We’ve taken back Sparta!” is the cry.
Read the full story here.
Share this:TweetSharetumblr Share + Today 1:10 PM EDTWhite House: Europe, Greece Should Seek CompromiseBREAKING: White House says Greece, Europe should seek compromise on debt crisis, allow Greece to remain in Euro zone. http://t.co/VecJ3ulmww
— Reuters Top News (@Reuters) July 6, 2015
Share this:TweetSharetumblr Share + Today 12:16 PM EDTEuro Statue Gets Pricy Makeover
In the meantime in Frankfurt:
The euro may be facing an existential crisis but the giant 14-meter sculpture of the euro symbol that towers over downtown Frankfurt, home of the European Central Bank, was still getting its biggest makeover in 13 years on Monday.
Considered an eyesore by many Frankfurters, the run down blue and gold structure situated in front of the ECB's former headquarters was dismantled by construction workers, who plan to fix it up from years of wear and tear, including attacks by protesters.
Read the full Reuters report here.
Share this:TweetSharetumblr Share + Today 12:13 PM EDTCruelty Or CompromiseKarl Whelan argues in The WorldPost:
The decisive nature of the No vote should persuade European leaders to set aside their hopes of forcing regime change and to focus their minds on the practical implications of a Grexit. They need to acknowledge something that is widely accepted: that Greece cannot pay back all of the money loaned by Europe. Pushing Greece towards a euro exit is probably the strategy that will ultimately minimize the return of money to the creditors.
Read the full blog here.
Share this:TweetSharetumblr Share + Today 11:53 AM EDTPiketty: Germany Shouldn't Be Telling Greece To Repay DebtThomas Piketty isn’t mincing words when it comes to the Greek debt crisis.
HuffPost Business reports:
In an interview with German newspaper Die Ziet last month (and translated recently by business analyst Gavin Schalliol), the leading French economist pummeled Germany for its hypocrisy in demanding debt repayment from Greece.
Piketty, who penned the blockbuster 2013 book on income inequality Capital in the Twenty-First Century, slammed conservatives who favor the economic austerity measures Germany and France are demanding of Greece, saying they demonstrate a “shocking ignorance” of European history.
“Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted,” Piketty said. “The first lesson that we can take from the history of government debt is that we are not facing a brand new problem.”
Read the full story here.
Share this:TweetSharetumblr Share + Today 11:10 AM EDTPaul Krugman Cheers 'No' VoteIn his Sunday New York Times column, the Nobel Prize-winning economist compared European leaders’ demand for more austerity measures to medieval doctors who prescribed a bloodletting to patients who grew more sickly. Though Greek voters’ rejection of their creditors’ strict economic terms could lead to instability in the short run, Krugman said the “no” vote will help Greece find the best path to solvency.
“A ‘yes’ vote in Greece would have condemned the country to years more of suffering under policies that haven’t worked and, in fact, given the arithmetic, can’t work: austerity probably shrinks the economy faster than it reduces debt, so that all the suffering serves no purpose,” Krugman wrote. “The landslide victory of the ‘no’ side offers at least a chance for an escape from this trap.”
Now, Greece seems more likely than ever to ditch the euro in favor of another currency, possibly the drachma, which preceded the legal tender of the 19-country monetary union. Krugman called that “the best of bad options.”
Read the full story here.
Share this:TweetSharetumblr Share + Today 10:33 AM EDTPublic Transportation Free For Another WeekAthens public transport free for another week http://t.co/KfSiwiWyby pic.twitter.com/eZje4803XV
— Kathimerini English (@ekathimerini) July 6, 2015
The managing director of the IMF, Christine Lagarde, issued an ultra-short statement on Monday responding to the result of the Greek referendum:
Share this:TweetSharetumblr Share + Today 10:01 AM EDTMeet Greece's New Finance MinisterMs. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), made the following statement today:
"The IMF has taken note of yesterday’s referendum held in Greece. We are monitoring the situation closely and stand ready to assist Greece if requested to do so.
The Guardian profiles Euclid Tsakalotos, Greece's new finance minister.
As the new point man who will coordinate face-to-face contact between Athens and its creditors, Tsakalotos is likely to be methodical, detail-oriented and tenacious. His leftist views, adopted at Oxford where he belonged to the student wing of Greece’s euro communist party, were honed in the anti-globalization movement.
Read the full story here.
Share this:TweetSharetumblr Share + Today 9:52 AM EDTTsakalotos To Replace VaroufakisBailout negotiator Euclid Tsakalotos to take over as finance minister #Greece
— Kathimerini English (@ekathimerini) July 6, 2015
From the Associated Press:
Share this:TweetSharetumblr Share + Today 9:27 AM EDTVaroufakis Leaves The Finance Ministry In StyleThe Kremlin says Russian President Vladimir Putin received a phone call from Greek Prime Minister Alexis Tsipras, whose government is racing against the clock to reach a bailout deal with creditors.
The two leaders discussed the results of Sunday's referendum in Greece and "several questions about the further development of Russian-Greek cooperation," the Kremlin said.
During Monday's call, the Kremlin said Putin "expressed support for the Greek people in overcoming the difficulties facing their country."
The head of VTB, Russia's second-largest state bank, said over the weekend that Russia might be interested in buying Greek assets if they were to be privatized but that direct loans to Greece were unlikely.
Greece's maverick finance minister Yanis Varoufakis, who announced his surprise resignation leaves the Ministry of Finance with his wife Danai on the back of a motorbike downtown Athens, on July 6 2015. (ANDREAS SOLARO/AFP/Getty Images)
Lucia Annunziata, Editorial Director of HuffPost Italy, reflects on the victory of the "no" camp:
Even if the referendum, as all of Europe's elites have maintained up until this point, was forced and an irresponsible act, now that it's over at least we can say that it brought about a necessary, definitive clarification of the true mood of the Greek people, the consensus around Alexis Tsipras and, last but not least, on Europe itself.
The crushing "no" vote has the ring of humiliation for everyone who wanted a clash in Europe, convinced they could rein in a riotous nation with a whip and a carrot.
Read the full story here.
Share this:TweetSharetumblr Share + Today 8:58 AM EDTPHOTOS: The Day After
A man begs for money in front of the Bank of Spain (Denis Doyle/Getty Images)
Nuns walk past the Bank of Spain headquarters. (Photo by Denis Doyle/Getty Images)
A man reads the fron tpage headlines about the results of Greece's referendum at a kiosk in Thessaloniki on July 6, 2015.(SAKIS MITROLIDIS/AFP/Getty Images)
The head of the group of eurozone finance ministers said on Monday that keeping Greece in the euro is still the aim.
Reuters reports:
Share this:TweetSharetumblr More"It doesn't bring us closer to a solution right away. In fact, when proposals are rejected that only makes things more difficult," Eurogroup head Jeroen Dijsselbloem told reporters.
Dijsselbloem said keeping Greece in the euro zone "is still their objective and mine."
Dijsselbloem, who is also Dutch finance minister, said the Dutch government would discuss a Greek request for additional emergency funding under the European Stability Mechanism (ESM).
"We are going to look, step by step, if we can save the process," Dijsselbloem said as he headed into a Dutch government meeting. "At the same time, there is a request for an ESM program."
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